Eastern lands labor pact

December 12, 1983

The tentative agreement between Eastern Airlines and three of its major unions shows that in salvaging a financially troubled firm there are alternatives to such Draconian measures as bankruptcy or breaking unions.

Indeed, the most promising element in the Eastern arrangement may well be a new sense of mutual partnership between management and workers - a factor that most corporate analysts say is essential if a firm is to be productive and truly competitive over a long period.

In agreeing to substantial pay cuts during the next year - as much as 18 percent to 22 percent for various workers - Eastern employees are doing what workers in other hard-pressed transportation-related firms have had to do in recent months.

The proposed Eastern agreement, however - it must still be ratified by its workers - is clearly different from other pacts in the extent to which management has made concessions. In return for the pay cuts, Eastern employees would receive substantial stock holdings in the carrier. In addition, Eastern's unions would have two members on the airline's board of directors. The unions would also have unlimited access to the firm's financial records.

Allowing union officials to serve on corporate boards is still relatively uncommon in the United States although the practice is fairly widespread in many European industrial nations, particularly West Germany. Former United Automobile Workers union head Douglas Fraser is a member of Chrysler's board. But Chrysler insists Fraser serves as an individual, not as a union representative.

Wall Street analysts following Eastern argue that the proposed agreement would save the airline up to $330 million in wages next year and also would lead to substantial gains in productivity.

And the very fact that the proposal is the result of amicable discussions between management and workers - compared with the rancor that has marked some other negotiations - means that Eastern should be able to start 1984 on an upbeat note.